Focusing on developing measures at the three levels (outcome, intermediate outcome/impact and output) permits a building block approach to performance measurement. At each level, your agency needs to measure its performance in a constructive and auditable fashion, and to map progress back to the capability and funding you have invested in the area. Having got some progress, your agency can then link its resources and interventions to the impact they are having and then to changes in core outcomes. This allows management to make decisions based on an assessment of the value-for-money provided.
One word of caution: multiple outputs often contribute to a given intermediate outcome or outcome, as represented by the multiple arrows in Figure 3. If this is the case, the timing of funding increases can still be contrasted with changes in intermediate outcome or outcome. If real12 increases in funding do not improve outcomes, value-for-money should be questioned.
Every agency operates in a unique environment with differing services, priorities, budgets and stakeholder relationships. Therefore, each agency needs to adapt this framework to suit its own contexts, but retain the overall approach of demonstrating the links between resources, outputs, intermediate outcomes and outcomes. The ultimate product sought through your measurement framework is a clear, evidence-based 'performance story' that links resources and outputs to positive results.
12 i.e. after allowing for inflation, by adjusting nominal prices using an appropriate price index.